Herbalife Denies Pyramid Scheme Allegations - KMSP-TV

Herbalife Denies Pyramid Scheme Allegations

Posted: Updated:

LOS ANGELES (FOX 11/CNS) - Herbalife has denied allegations in a lawsuit by a former salesmen who contends the nutritional supplement company is running an unlawful pyramid scheme, court papers obtained today showed.

In a 42-page answer to ex-Herbalife distributor Dana Bostick's complaint, the Los Angeles-based company also denies that class action certification is appropriate.

Bostick, a retired Los Angeles general contractor, alleges that Herbalife systematically pays bonuses to distributors based on their recruitment of new salespeople rather than sales.

In a recent ruling, U.S. District Judge Beverly Reid O'Connell denied Herbalife's motion to dismiss the case.

The judge wrote that Herbalife sales people "pay money for the right to sell Herbalife products" while "supervisors pay money to receive recruitment rewards which are unrelated to the sale of products to ultimate users."

If Bostick's assertions are proven, Herbalife could fall under the Federal Trade Commission's definition of an illegal pyramid scheme: one in which those at the top are paid with fees from those recruited at the bottom.

In its answer, filed Tuesday in Los Angeles federal court, Herbalife denies each of Bostick's allegations, even questioning whether the plaintiff is indeed a resident of California.

The company admits only that it is "a network marketing company and has a marketing plan through which individual independent distributors market, promote and sell Herbalife products," according to the filing.

Herbalife also agrees that it entered into a distribution agreement with Bostick in April 2012, but denies that he "accurately and completely summarized" the company's sales and marketing plan, or its policies and rules, in the lawsuit.

Bostick's attorney, Philip D. Dracht, said he was surprised at Herbalife's "seeming inability to admit the most basic facts about their marketing plan -- facts that have already been found by a prior court to be true."

Dracht said he and Herbalife were working out a schedule and expected O'Connell to set a series of court dates in the near future.

  • Los Angeles & SoCal NewsLos Angeles & SoCal NewsMore>>

  • Rental Crisis: How Much Is Too Much ?

    Rental Crisis: How Much Is Too Much ?

    Thursday, April 24 2014 1:34 AM EDT2014-04-24 05:34:48 GMT
    One person pays $1000 a month for an aging two bedroom apartment in Boyle Heights. Another pays $2200 for Sherman Oaks. Still another pays $6000 and up for a brand new luxury building in Playa Del Ray in an area now dubbed '' Silicon Beach''.
    One person pays $1000 a month for an aging two bedroom apartment in Boyle Heights. Another pays $2200 for Sherman Oaks. Still another pays $6000 and up for a brand new luxury building in Playa Del Ray in an area now dubbed '' Silicon Beach''.
  • Whooping Cough Cases Spike

    Whooping Cough Cases Spike

    Thursday, April 24 2014 1:20 AM EDT2014-04-24 05:20:51 GMT
    From Ventura to Los Angeles, Orange to Riverside, whooping cough cases are on the rise.
    From Ventura to Los Angeles, Orange to Riverside, whooping cough cases are on the rise.
  • Pelican Found On Local Beach Mutilated With Jaw Pouch Cut

    Pelican Found On Local Beach Mutilated With Jaw Pouch Cut

    Thursday, April 24 2014 12:44 AM EDT2014-04-24 04:44:31 GMT
    A California brown pelican that apparently had its jaw pouch slit is expected to undergo surgery, and a $7,500 reward was being offered today for information that leads to the culprit.
    A California brown pelican that apparently had its jaw pouch slit is expected to undergo surgery, and a $7,500 reward was being offered today for information that leads to the culprit.
Powered by WorldNow

KMSP-TV
11358 Viking Drive
Eden Prairie, MN 55344

Phone: (952) 944-9999
Fax: (952) 942-0455

Didn't find what you were looking for?
All content © Copyright 2000 - 2014 Fox Television Stations, Inc. and Worldnow. All Rights Reserved.
Privacy Policy | Terms of Service | Ad Choices